Why U.S. Bancorp Shares Slipped

While Fools should generally take the opinion of Wall Street with a grain of salt, it's not a bad idea to take a look at particularly stock-shaking analyst upgrades and downgrades -- just in case their reasoning behind the call makes sense.

What: Shares of U.S. Bancorp (NYSE: USB  ) slipped yesterday after Deutsche Bank downgraded the banking giant from buy, to hold.

So what: Along with the downgrade, analyst Matt O'Connor lowered his price target to $38 (from $41), pretty much exactly where the stock closed yesterday. While value investors might be attracted to the stock's recent slide -- triggered by disappointing Q3 results -- O'Connor believes that upside is limited, given the near-term headwinds working against the company.

Now what: Deutsche lowered both its 2014 and 2015 profit estimates for U.S. Bancorp below the consensus view. "3Q was disappointing in our view as we est. there was $100m+ of MSR gains that weren't disclosed," noted Deutsche. "Underlying trends were weaker than expected and the outlook seems a bit more sluggish than we had previously assumed." When you couple that sluggishness with the stock's price-to-book ratio of two -- a clear premium to close peers -- I'd agree that U.S. Bancorp's risk/reward trade-off isn't all that compelling. 

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  • Report this Comment On November 17, 2013, at 10:00 AM, dukesnider wrote:

    Lou Simpson,former Geico portfolio manager,has been praised by Warren Buffett for his stellar

    performance over the years.He averaged returns exceeding 20 percent per annum.

    He retired several years ago, and started an investment fund called SQ Advisors.The fund started reported its quarterly holding on 2/15/12 on its SEC 13 for firm.institutions n

    Must file this within 45 calendar days after the end of each calendar quarter, if they are managing more than $100MM.The last quarterly report issued on 11/14 indicates that Simpson established a significant holding in USB. Full disclosure: I am a shareholder. Good luck to all.

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9/28/2016 11:20 AM
USB $42.50 Down -0.40 -0.93%
US Bancorp CAPS Rating: ****